VAT on Profit Margin Scheme in UAE

There is a recent public clarification (VATP002) regarding profit margin scheme for Value Added Tax (VAT) in the United Arab Emirates – UAE

Normally, a taxable person charges 5% VAT on supplies he makes during ordinary course of business but in profit margin scheme “the tax is the difference between the amount paid for an item and the price is sold for” (VAT on profit margin earned instead of original selling price).

In short profit margin scheme is a Value added Tax scheme that is only applicable on Second-hand-goods on which VAT has already been applied and Paid on its first supply.

Source: gccfintax.com

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